Pet health insurance is gaining popularity and proving a useful tool for pet owners. Consumers of pet insurance, or any other type of insurance for that matter, benefit when insurance providers are able to implement efficient enrollment, underwriting, and claims procedures. Insurance providers benefit when those same procedures provide certainty as to the provider's potential exposure to claims.
The field of pet insurance has many inherent uncertainties that can prevent providers from providing efficient enrollment, underwriting, and claims services. For example, it would not be unexpected that a less than truthful consumer would seek pet insurance to cover expenses related to a pet's pre-existing condition. To address this situation, provider's of pet insurance may take steps to manually verify the pet's heath by contacting the pet's veterinarian before deciding to issue a policy and before paying any claim. This manual approach inflates insurance costs for the consumer. Eliminating this manual approach without a viable alternative exposes the insurance provider to unknown risks—also serving to inflate insurance costs.
Moreover, the nature of insurance is rapidly evolving. On a geographic basis, the insurance industry has recently begun to track, compile, and monitor various risks according to zip code or some larger scale. As an example, a geographic area for a given zip code may contain a number of different risks zones related to the health of a pet. Identifying a location as being within that zip code does not, by itself, mean the location lies within or outside a risk zone. Before an insurance policy is issued, a manual examination by an underwriter is often required to determine if a given location falls within a particular risk zone. Not only is this manual examination time consuming, its accuracy can be suspect.
Another challenge facing the insurance industry has been to balance risk and claims paid against the premium rates to ensure profitability. One of the greatest uncertainties has been the unanticipated insured risk, only determined to be covered later, usually after litigation. These result in long lists of terms, conditions and exclusions to coverage. Market needs and desires often result in exceptions to the exclusions, which also may have exclusions, and so on. Additionally, for desired insurance coverage which falls outside of the scope of a normal policy, endorsements or riders are provided that also may include exclusions, exceptions and so on.